New Delhi, 14 October (H.S.):

The Union Cabinet on Wednesday approved the proposed sale of a 60.72 per cent stake in IDBI Bank to Fairfax Financial Holdings Ltd. for approximately Rs.52,878.08 crore. Following the sale of Air India, the transaction would rank among the country’s largest strategic disinvestment deals.

The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, approved the strategic disinvestment of IDBI Bank on Wednesday. Under the proposed transaction, the Central Government and the Life Insurance Corporation of India (LIC) will jointly divest their 60.72 per cent stake in the bank.

Union Minister for Information and Broadcasting Ashwini Vaishnaw announced the Cabinet’s decision at a press conference in New Delhi. He described the approval as a significant step towards concluding a disinvestment process that has been underway for more than five years.

Vaishnaw said the completion of the transaction would represent the largest foreign direct investment (FDI) transaction in India’s financial sector to date. The proposed sale comprises the Central Government’s 30.48 per cent stake and LIC’s 30.24 per cent stake in IDBI Bank.

Following the strategic restructuring, the government’s shareholding in the bank is expected to fall to 15 per cent, while LIC’s stake will decline to 19 per cent.

The minister said the CCEA had approved M/s 10955230 Canada Inc., the parent company of Fairfax Financial Holdings Ltd., as the strategic buyer for the transaction. The company will acquire a 60.72 per cent stake in IDBI Bank at a purchase price of approximately Rs.52,878 crore.

Transaction Expected to Be Completed in FY 2026–27

Arunish Chawla, Secretary of the Department of Investment and Public Asset Management (DIPAM), said the acquisition was expected to be completed during the current financial year, 2026–27.

He added that the interests of IDBI Bank’s employees would receive due consideration throughout the process.

As part of the transaction, Fairfax will also be required to make an open offer to the bank’s minority shareholders in accordance with the applicable regulatory requirements.

Chawla further stated that Fairfax, which also holds a stake in CSB Bank, would have to either merge CSB Bank with IDBI Bank within two years or divest its stake in CSB Bank and exit the investment.

Fairfax to Assume Control Subject to Regulatory Approvals

The proposed sale of the combined 60.72 per cent stake held by the government and LIC would transfer control of IDBI Bank to Fairfax Financial Holdings, subject to the completion of the transaction and receipt of the necessary regulatory approvals.

The strategic disinvestment is expected to mark a significant change in the ownership structure of IDBI Bank, with the government and LIC retaining minority stakes following the proposed transaction.

The Cabinet’s approval clears an important stage in the divestment process, although the transfer of control will depend on the fulfilment of the applicable legal and regulatory requirements.

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Hindusthan Samachar / Jun Sarkar